Abstract

http://ssrn.com/abstract=2046233
 
 

Citations (8)



 


 



Analyst Initiations of Coverage and Stock Return Synchronicity


Steve Crawford


University of Houston

Darren T. Roulstone


Ohio State University (OSU) - Fisher College of Business

Eric C. So


Massachusetts Institute of Technology (MIT) - Sloan School of Management

April, 25 2012

Accounting Review, Forthcoming

Abstract:     
We examine how the information produced by analysts when they initiate coverage contributes to the mix of firm-specific, industry-, and market-wide information available about the firm. We hypothesize that the first analyst to initiate coverage provides low cost market and industry information allowing him/her to follow more stocks, whereas subsequent analysts provide firm-specific information to distinguish themselves from existing analysts. We use stock return synchronicity to measure the mix of information available about a firm, with higher synchronicity indicating more industry and market information. Coverage initiations of firms with no prior analyst coverage increase synchronicity suggesting that analysts produce industry- and market-wide information. In contrast, analysts initiating coverage on firms with existing coverage appear to focus on producing firm-specific information as these initiations lead to reduced synchronicity. Together, our findings indicate that the type of information analysts produce at initiation depends on the information provided by other analysts.

Number of Pages in PDF File: 44

Keywords: Stock Return Synchronicity, Financial Analysts, Analyst Initiations

JEL Classification: G10, G14, M40, M41

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Date posted: April 26, 2012  

Suggested Citation

Crawford, Steve and Roulstone, Darren T. and So, Eric C., Analyst Initiations of Coverage and Stock Return Synchronicity (April, 25 2012). Accounting Review, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2046233

Contact Information

Steve Crawford
University of Houston ( email )
Houston, TX 77204
United States
Darren T. Roulstone (Contact Author)
Ohio State University (OSU) - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States

Eric C. So
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
77 Massachusetts Ave.
E62-416
Cambridge, MA 02142
United States
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